2014 LIHTC PROGRAM UPDATE

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Magdalene Helen Lloyd
5 years ago
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1 2014 LIHTC PROGRAM UPDATE City Council Workshop July 29, 2013

2 LIHTC Program in Des Moines Significant impact on Des Moines development 89 projects/5,000 units in Des Moines ( ) 30 projects/1,850 units in the suburbs Six Des Moines projects received LIHTC in Rehab and 3 New Construction Created/Maintained 393 affordable housing units Accounted for 62% of all units awarded LIHTC

4 Metro area subsidized housing

5 City s role in LIHTC program The City has limited oversight of LIHTC projects The City does not have input on scoring The City has control of the following: Zoning/Site plan/multi-family design approvals Tax Abatement (Design criteria must be met) Enterprise Zone Creation/EZ Zone Tax Credits Other gap funding (TIF, HOME, CDBG, others) City does require that developers notify and meet with neighborhood associations

6 Program Evaluation In December, Council asked staff to evaluate the impact of the program on our community Staff examined the Qualified Allocation Plan (QAP) The QAP govern scoring for the LIHTC program Based on the evaluation, staff asked IFA to prioritize the following criteria in the 2014 QAP: Location near everyday amenities High quality design and construction materials Mixed Income Projects Maintaining existing affordable housing stock

7 LIHTC Developers Meeting In July, Staff met with area LIHTC developers to discuss program concerns Concerns/comments by developers included Mixed income buildings are hard to finance Need to inform residents on the benefits of affordable housing Clarification of the role the neighborhoods play in the approval process Developers feel squeezed between lower cost caps and more program requirements

8 2014 Draft QAP The Draft 2014 QAP was released on July 10 Significantly changed from the 2013 QAP Cost Caps formula reconfigured Total points reduced from 520 to Program Timeline August 21 September 19 November 18 December 9 March 2014 Submittal Deadline for P&Z Commission P&Z Commission Hearing Council approves LIHTC applications Application Deadline LIHTC Awarded

9 2014 Cost Caps/Project Costs IFA instituted a 2-tiered cost cap Project maximum cost 221 (d) (3) limit Tax credit per unit cap This change provides developers and communities with flexibility for different projects Developers can spend more on LIHTC Projects Developers will need additional gap financing to make projects economically feasible

10 2014 Project max/credit Caps New Construction Type 0 Bedrooms 1 Bedroom 2 Bedroom 3 Bedrooms 4 Bedrooms Project Max $127,280 $145,907 $177,422 $229,526 $251,949 Unit Cap $85,000 $97,500 $117,500 $150,000 $165, % Unit Cap 2013 Cost Caps Rehab $110,500 $126,750 $152,750 $195,000 $214,500 $120,000 $135,000 $160,000 $190,000 $210,000 Type 0 Bedrooms 1 Bedroom 2 Bedroom 3 Bedrooms 4 Bedrooms Project Max $127,280 $145,907 $177,422 $229,526 $251,949 Unit Cap $65,000 $75,000 $90,000 $115,000 $125, % Unit $84,500 $97,500 $117,000 $149,500 $162,500 Cap 2013 Cost Cap $140,000 $155,000 $180,000 $210,000 $230,000

11 Unit Credit Cap Concerns Staff is concerned about the impact the unit tax credit cap will have on development May increase the need for gap financing Decrease the quality of construction to meet the reduced tax credit caps Rehab projects are more difficult to finance with LIHTC credits Renter to Ownership Savings Equity (ROSE) Program projects may be more difficult to finance

12 Qualified Census Tracts Several new QCT s were established in Des Moines Projects in Qualified Census Tracts (QCT s) receive 30% more tax credits Unit Caps are increased 30% in QCT s LIHTC developers target QCT s for development QCT s defined by HUD as areas where more than 50% of households earn less than 60% AMI ($43,470 for a family of 4) More developers will develop within the QCT s

13 2013 QCT Map

14 2014 QCT Map

15 Scoring Changes Total points reduced from 520 to 370 Resident profiles are eliminated Senior, domestic violence victims, disabled citizens, homeless Senior project set-aside was created Local Government Contribution Points reduced from 50 to 30 Due to tax abatement and EZ Zones, most projects received 50 points in this category Allow City s Federal funds to count toward local government contribution

16 Scoring Changes New scoring criteria 25% of units are 4 Bedroom units (5 Points) Areas with a Revitalization Plan (3 Points) Still working to clarify definitions with IFA Points for projects that charge 10% less than the maximum rents allowed (15 Points) Projects with storm shelters (10 Points)

17 QAP Response to City Concerns Located near everyday amenities Added points for projects near workforce training and libraries Points in this category did not change Higher design quality and construction materials Cost cap changes allow more design flexibility Lower Unit caps will increase need for additional subsidy

18 QAP Response to City Concerns Mixed Income Projects Reduced points from 25 to 20 Also heard from developers that mixed income projects are difficult to finance Maintaining existing affordable housing stock Created a new classification for all rehab projects Reduced tax credits per unit for rehab projects

19 Overall Impact on Des Moines First year of new QAP will be a learning experience Staff believes new QAP focuses on larger, new construction units Developers and staff are not fully aware of how the new QAP will focus development Changes in LIHTC development patterns Less activity expected along the Hubbell Avenue (mostly not a QCT) Fewer downtown projects (program emphasis on new construction, 3-4 bedroom units, lower tax credit per unit caps) More south-side projects (areas recently placed into QCT s)

20 Overall Impact on Des Moines Additional requests for gap financing More flexibility for higher quality designs/amenities More 3-4 bedroom units Unit credit caps higher for 3-4 bedroom units Additional points for 4 bedroom units Fewer rehab projects Unit credit caps may make rehab projects more difficult

21 QUESTIONS OR COMMENTS

Tax Credits 101. Wednesday, November 7 10:45am 12:00pm

Tax Credits 101. Wednesday, November 7 10:45am 12:00pm Tax Credits 101 Wednesday, November 7 10:45am 12:00pm Today s Panel Kevin Clark Ohio Housing Finance Agency (OHFA) Brian Graney Ohio Capital Corporation for Housing Meg Manley PIRHL, LLC Tim Swiney Wallick